RTE legislation consultation: 'RTE companies' sections

[NewHouse]

The government is currently undetaking a consultation on the RTE (Right to enfranchise) sections (121-124) of the Commonhold & Leasehold Reform Act which have yet to be enacted. Now is the time to make your views known If, like me, you have found yourself at the mercy of a really badly written piece of legislation, PLEASE MAKE YOUR VIEWS KNOWN TO THE GOVERNMENT, OR ELSE NOTHING WILL EVER CHANGE.

Full details can be found at:
http://www.communities.gov.uk/publications/housing/righttofranchiseprovision

The closing date for responses is 3rd August 2009.

[jeffrey]

Sections 121-124 have been enacted. They're in an Act of Parliament!
But it's true that their amendments of the 1993 Act (re a statutory RTE company scheme requirement) aren't yet in force.

[artist]

Sections 121-124 have been enacted. They're in an Act of Parliament!
But it's true that their amendments of the 1993 Act (re a statutory RTE company scheme requirement) aren't yet in force.

What does that mean? Are Sections 121-124 in force or not?

[jeffrey]

What does that mean? Are Sections 121-124 in force or not?
No. Although the 2002 Act was enacted (as I previously posted), s.121-s.124 have not yet been covered by a Commencement Order.
It's about this commencement that HMG is consulting.

[artist]

I've been looking at the consultation document but am finding it hard to understand the bit about potential discrimination in the terms of participation and the apportioning of costs. I thought when you buy a share in the freehold the shares are equal so the costs would be split evenly too? Isn't the price determined in the same way that a lease extension is valued ie. there is a loose formula already? Why would the entire value of the freeholder's interest in the premises as a whole be more than the sum of the freehold interest in all the flats individually? How would acting as an RTE company alter what is in place already?
I'd be interested to hear views on this and any examples which might help me understand!:confused:

[jeffrey]

CURRENT: lessees- or majority of them- join together, serve s.13 Notice (in some cases), buy f/r one way or another. No rules re RTE company.

NEW (IF IMPLEMENTED): as above, except:
a. RTE company (with prescribed Memo/Arts., similar to RTM company) is essential as their vehicle [under new s.4A-4C of 1993 Act];
b. RTE company invites lessees to participate [new s.12A of 1993 Act]; and
c. other consequential 1993-Act amendments are made by Schedule 8 to 2002 Act, esp. changing 'nominee purchaser' references to 'RTE company' so it will no longer be possible to acquire f/r in joint names of 2/3/4 lessees- a company, limited by guarantee, will be essential.

[Kenny]

Deadline for responses to this consultation is 3 August. It would seem the Government’s preferred option is to repeal sections 121-124 altogether.

These were intended to offer protection to qualifying tenants so that they cannot be deliberately excluded from the enfranchisement process – this Part of the Act never came into force and so eligible tenants can be excluded from the process directly or indirectly by being offered unfavourable participation terms.

Government claims that, despite this, “the process works well”. Although obviously not if you are one of the tenants that has been excluded in such fashion from participating.

An example of this situation: a group of tenants negotiates freehold buyout with the freeholder – they have sufficient majority but most of the prospective buyers don’t really understand what is going on. The terms offered to some “qualifying tenants” are less favourable than others – the tenant offered worse terms does not participate, instead his “share” in the freehold company (and a head lease on his flat ) is offered to (and accepted by) another person (usually connected with those running the show) on preferential terms. In short the process is being manipulated by a few “clever” guys who want to be the new “landlords” and nothing to do with the original purpose of the enfranchisement.